When Oil Prices Dip, Unexpected Winners Emerge [United States Oil Fund LP (ETF), ProShares Ultra DJ-UBS Crude Oil]

Not surprisingly, for large oil-producing nations—such as Russia and Venezuela—lower oil prices are creating havoc. But for countries that import a significant amount of their oil, including many countries in Asia, lower oil prices are a boon.

One big beneficiary of lower oil prices is India, which imports roughly 85% of its oil. Cheaper oil prices are helping to lower India’s chronically high inflation rate (now down to 6.5%) and, given large government energy subsidies, aiding the country’s fiscal position. Lower oil prices, coupled with further reforms from the new Modi-led government, helped Indian equities hit an all-time high in October.

Along with recent strength in both China and Japan––also big energy importers––this confirms our view that investors should consider the opportunities in Asian equities.

Sources: Bloomberg

Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. He is a regular contributor to The Blog and you can find more of his posts here.

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